Stephen Pickford
Associate Fellow, Global Economy and Finance
If the president-elect follows through on campaign rhetoric, economic cooperation and the institutions that underpin it are in for a rough four years.
Officials arrive at World Trade Organization headquarters in Geneva. Photo by Getty Images.Even before the US election, the WTO was finding it difficult to be a catalyst for multilateral trade liberalization. Photo by Getty Images.

From what we know so far, a Trump presidency is likely to shift US policy on most international issues in a less cooperative direction, with narrow US interests the foremost consideration – putting America first.

If he is to deliver on only a fraction of his supporters’ expectations, he will have to take a more aggressive stance on trade, monetary relations and international institutions. This will put the US on a potential collision course with other major countries and blocs. And the international organizations, which rely on cooperation and compromise among their major shareholders, will find it harder to build the support they need to function effectively.

Trump’s rhetoric on other NATO countries having to shoulder greater responsibility for defence is likely to be mirrored in the economic institutions. As the major shareholder in the Bretton Woods institutions, the US has enormous informal clout in their policy decisions, and a formal veto on the most important decisions. With an administration focused on America’s own interests and a hostile Republican-dominated Congress, the IMF will find it harder to get US backing if countries come to it for financial support, especially if it requires more financing from member countries. And with Obama’s choice as World Bank president, Jim Yong Kim, in place for another five-year term to 2022, a Trump administration is unlikely to be putting international development high on its list of priorities.

The WTO is likely to have an even tougher time over the next four years. Even before the US election, the WTO was finding it difficult to be a catalyst for multilateral trade liberalization. That is now completely off the agenda. But the WTO’s role in settling disputes has been important in ensuring that trade arguments do not escalate out of hand. If the campaign rhetoric (from both candidates) is followed through on, the US is likely to take a more aggressive stance on what it sees as unfair trade practices. Unless the WTO is able to carry out its role as an impartial arbiter, trade disputes are set to get much messier.

And what of the informal country groupings that focus on international economic issues? The G20 was already struggling to live up to its early promise as a leaders’ forum, and is perceived by many as failing to show sufficient leadership on the risks and challenges facing the global economy. If the US–China relationship sours (as seems likely under a Trump presidency), it will be even harder to get this grouping (which brings together the major advanced and emerging countries) to agree.

The G7 would seem on the face of it to be better placed. But if the Trump administration does indeed adopt a more aggressive stance in international economic relations, it is unlikely to win support in other advanced economies. Within the G7, the US can probably count on the support of Canada, Japan and the UK (especially post-Brexit), but the other members – Germany, France and Italy – will be much more chary of the US agenda, especially with their own domestic political battles (and elections) looming large.

So we are facing a period when international economic cooperation will be even harder to achieve, and when tensions over trade in particular will be rising. Predictions about the impact on the global economy are fraught with problems, especially in a year when expert predictions have proved very far from the mark. But it seems clear that downside risks have got larger, and the ability of countries to unite in the face of these risks has reduced.

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